Inflation unlikely to raise further: BofA
Almost three quarters of respondents believe inflation is only transitory, according to a Bank of America (BofA) survey, with the percentage of respondents expecting higher inflation down 19% from May.
According to the latest Bank of America Global Fund Manager survey, which surveyed 224 fund managers with $667 billion in assets under management, a net 64% of investors were expecting higher inflation in the next 12 months, down 19% from the previous month.
Some 72% said they believed inflation was only transitory compared to 23% who thought it would be permanent.
“Investors [are] bullishly positioned for permanent growth, transitory inflation and a peaceful Fed taper via longs in commodities, cyclicals and financials,” the report said.
However, the threat of rising inflation remained the number one tail risk for respondents, joint with the threat of a taper tantrum. Over half of respondents expected the US Federal Reserve to taper its asset purchases in August/September.
Regarding positioning, BofA said investors were “significantly overweight” cyclical stocks such as the Eurozone, banks, energy and materials and were underweight defensives. There was a 39% underweight by respondents to utilities, the largest since February 2017. Technology weightings had doubled from 11% to 22% over the month.
Investors said they expected value stocks would be the asset most likely to outperform over the next 12 months followed by technology stocks.
Cash was down from 4.1% in May to 3.9% in June which BofA said was an indicator to sell global equities.
AUTHOR
Laura Dew
Recommended for you
BlackRock has announced its plan to acquire real estate investment firm ElmTree Funds which will be integrated into its new private financing solutions business.
With share price growth of 45 per cent for FY25, Australian Ethical has shared why it believes the firm has done so well compared to its active peers.
ETF investors would be wise to consider global or European exposure for their equity ETF allocations, according to AXA IM, with US government action expected to hit both its equity and bond performance.
A specialist ETF provider is seeking to become “the new Betashares” with its active ETFs, thanks to its use of algorithms to achieve outperformance.
